The Bitcoin network is a peer-to-peer virtual currency network that operates on a cryptographic protocol. While “Bitcoin” refers to the virtual currency network, “bitcoin” refers to the underlying unit of virtual currency. Users send bitcoins by broadcasting digitally signed messages to the network using Bitcoin wallet software. Transactions are recorded into a distributed public database known as the block chain, with consensus achieved by a proof-of-work system referred to as “mining”. The block chain is distributed internationally using peer-to-peer file sharing technology. The protocol was designed in 2008 and released in 2009 as open source software by “Satoshi Nakamoto,” the pseudonym of the original developer or group of developers.
The block chain cannot be changed without redoing the work that was required to create each block downstream to the modified block. The longest chain serves not only as proof of the sequence of transaction events but also records that this sequence of events was verified by a majority of the Bitcoin network's computing power. As long as a majority of Bitcoin network's computing power is controlled by nodes that are not cooperating to attack the Bitcoin network, the non-malicious majority of the Bitcoin network will generate the longest chain of records and outpace attackers.
Fungibility is the characteristics of a good or a commodity whose individual units are capable of mutual substitution. For example, since one ounce of gold is equivalent to any other ounce of gold, gold is fungible. Other fungible commodities include sweet crude oil, company shares, bonds, precious metals, and currencies. Although Bitcoins may be intended to be fungible, each bitcoin has its own distinct history and is not truly fungible. The Internal Revenue Service (IRS) decided in March 2014, that bitcoin and other virtual currencies are treated as property, instead of currency for IRS purposes. To the extent that bitcoins are not truly fungible, bitcoins are not the same as a currency for IRS purposes.
Today's cellular phone services allow users using mobile devices, such as cellular phones, to send and receive messages using a text messaging service, such as SMS (i.e., Simple Messaging Service), MMS (i.e., multimedia messaging service), etc. Certain cellular phones (referred to as smartphones) are equipped with Internet browsing capability in addition to the text messaging capability. The Internet browsing is typically offered by Internet service providers as a subscribed service, referred to as a data plan or Internet data plan. For example, the cellular phone service providers may provide wireless data plans using wireless Internet connections. Other service providers may provide wired data plans using wired Internet connections. Having an Internet data plan subscription and in an area with proper wired or wireless Internet coverage, a user is provided with web browsing capability to access the Internet.